WTI oil gains for second week to narrow discount vs. Brent

West Texas Intermediate crude gained for the sixth time in seven days as the dollar weakened and inventories fell at a major storage hub. The U.S. benchmark narrowed its discount to Brent crude for a fifth week.

WTI rose to a three-week high as the dollar slid to a one-week low against the euro after a report showed U.S. inflation is contained. Stockpiles at Cushing, Oklahoma, decreased last week to the lowest level since December, according to the Energy Information Administration. Futures pared their advance as U.S. stocks retreated after an index of consumer confidence unexpectedly slipped. The spread between WTI and Brent is set for a weekly drop even as Brent climbed more than WTI today.

“WTI’s been holding strong and the Brent-WTI spread is a big mover here,” said Bill Baruch, a senior market strategist at commodities trading firm Iitrader.com in Chicago. “It’s a currency trade. The confidence number and the equities are putting pressure on oil.”

Futures for April delivery rose 42 cents to $93.45 a barrel on the New York Mercantile Exchange, the highest settlement since Feb. 20. Prices gained 1.6% this week. Volume was 3.3% below the 100-day average for the time of day at 2:35 p.m.

Brent for May delivery gained 86 cents, or 0.8%, to $109.82 a barrel on the London-based ICE Futures Europe exchange. Volume was 6.5% below the 100-day average.

Brent Spread

The May Brent contract was $16 more expensive than WTI futures for the same month. April Brent expired yesterday at $109.42 a barrel, $16.39 higher than the same-month WTI contract.

The gap between Brent and WTI will average about $16 this year and narrow to $9 in 2014 as new pipeline capacity lowers the cost of moving crude to Gulf Coast refiners from the central U.S., the EIA, the Energy Department’s statistical arm, said in a monthly report this week. The spread will average $7.50 in the second quarter of this year, Goldman Sachs Group Inc. said in a March 11 report.

The dollar headed for its first weekly loss against the euro since the start of February after the Labor Department reported that U.S. consumer prices increased 2% in the 12 months ended in February, after a 1.6% year-over-year gain the prior month.